The rumor had sufficed and the good news broke out. Since then, it’s just been continuously falling.

Ripple was dead.

What does this tell us about stock rumors?

You might’ve heard the phrase “buy the rumor, sell the news”.

Read on to learn why this bit of wisdom has been passed down by the Forex gurus.

Stock Rumors vs. Stock News

Trading Forex, we’re constantly perusing the headlines to stay on top of paradigm shifts or fads.

But unlike other investors, our focus is on changes in interest rates. Such changes are powerful tidal waves that ripple outward and affect the global market.

Common Sense

When we anticipate a particular change, we have to assess the nature of it.

For example, the U.S. government might release a statement which promises a massive growth in employment. However, from 2005-2006, not all of those promises were fulfilled, since Hurricane Katrina devastated Louisiana.

These kinds of events obviously predict a decrease in the value of the USD, which would also affect a wide variety of other commodities.

Other events, however, are more ambiguous.

Understanding how these kinds of changes affect things requires not much more than common sense.

Keep in mind, though: common sense is a learned trait.

A one-year-old doesn’t have common sense because they haven’t yet had the experiences which promote its development. By trial and error, we get a feel for things.

The same applies to Forex trading. Understanding the ups and downs of the news requires experience and dedication.

Buy the Rumor, Sell the News

With the advances of both artificial and human intelligence, there’s never been greater pressure for foresight in Forex.

As soon as rumors come out, the stock wizards are placing their bets.

Once the news about the stock comes out, everybody wants a piece of it. This leads to overvaluing, which leads to a decrease in value.

CFTC rule 4.41

Past performance is not necessarily indicative of future results.

No representation is being made that any account will or is likely to achieve profits or losses similar to those shown; in fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particular trading program.

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